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Saturday, July 28, 2007

Global Warming Surrender Monkeys

Tom Borelli on CNBC's Squawk Box on July 23.

Tom Borelli has an excellent new column on Townhall.com today on the corporate social responsibility movement, in which corporations seek to appease leftist critics at the expense of stockholders, taxpayers amd the public welfare, while the leftist groups offer their imprimatur in exchange for cash.

Tom's column today, "Serving Caterpillar at the Global Warming Table," focuses on one of these exercises in mutual exploitation, the United States Climate Action Partnership, or USCAP.

As Tom describes it:

...USCAP is comprised of more than twenty companies including corporate titans General Electric, DuPont, PG&E and Caterpillar and is joined by six environmental advocacy groups including Natural Resources Defense Council, Environmental Defense and The Nature Conservancy.

USCAP’s goal is “to call on the federal government to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.” USCAP is guided by six operating principles but its policy goal is to establish a Kyoto type treaty cap-and-trade regulatory scheme that sets limits for carbon dioxide emissions – a greenhouse gas.

Under cap-and-trade, the government gives or sells to companies a specific amount of carbon dioxide they are allowed to emit (the cap) and if they don’t use their entire allocation (carbon credits), they can sell the unused portion to another business (the trade)...

As Tom notes, a few of the companies that joined USCAP have a proft-seeking motive for doing so, so whatever the state of their citizenship skills, they are at least offering some short-term benefit to their stockholders.

However...

for other companies the profit motive is much less clear or totally absent. Take for example Caterpillar Inc. – the construction and mining equipment and engine company. Judging by statements made by CEO Jim Owens and the negative impact of cap-and-trade on the economy and its customers, Caterpillar’s participation in USCAP is not based on increasing profits.

Caterpillar’s business and future profitability depends on a growing economy and growth in the energy and mining industry. In fact, according to its 10-K filing – a detailed annual report filed with the Securities and Exchange Commission (SEC) – Caterpillar cites a decline in energy and mining industries as a business risk. “The energy and mining industries are major users of our machines and engines. Decisions to purchase our machines and engines are dependent upon performance of these industries. If demand of output in these industries increases, the demand for our products would likely increase and vice versa.”

As regular readers will remember, Tom and his wife Deneen, a full-time fellow with the National Center's conservative black group Project 21, attended Caterpillar's annual stockholder meeting in June and confronted CEO James Owens directly. A press release at the time described the confrontation:

During the meeting's question-and-answer session, Project 21 Fellow Deneen Borelli questioned Caterpillar executives about whether the company performed a complete cost-benefit analysis on the effects a cap-and-trade policy on carbon emissions would have on Caterpillar, its customers and America's poor prior to the company joining the group, which lobbies for such policies.

"I asked the head of Caterpillar, James Owens, three different times if the company had done a cost-benefit analysis and he said 'no,'" said Ms. Borelli. "He also said that he was not planning to do one in the future. Unfortunately, America will be paying for this incompetence in the form of rising energy costs."

Mr. Owens also acknowledged that he had received and read the letter sent to him by over 70 national and state policy groups and representatives of mining, ranching, forestry, construction and agricultural industries, urging him to withdraw Caterpillar's membership in USCAP. The letter to Mr. Owens is available at www.nationalcenter.org/caterpillar_climate.pdf.

The Congressional Budget Office reported in April that the restrictions sought by USCAP would especially harm the poorest fifth of the U.S. population. As a percentage of wages, the poorest quintile would pay nearly double the costs borne by the richest quintile for energy. In addition, the CBO study found that "current workers and investors in [energy] industries would experience costs in the form of lower wages, job losses, and reduced stock values" as a result of a cap-and-trade emissions policy.

Tom Borelli, senior fellow with The National Center for Public Policy Research and portfolio manager for the Free Enterprise Action Fund, asked Mr. Owens if he had read the CBO report. Mr. Owens responded that he had not.

Ms. Borelli also pointed out to Mr. Owens that Caterpillar's involvement with USCAP had already lost the company at least one major customer, Murray Energy Corporation. Mr. Owens acknowledged this and said he was sorry about it.

"It's outrageous that a CEO would harm his key customers without doing any due diligence to determine the impact on his customers and shareholders," said Dr. Borelli. "This is why shareholders need to demand a debate regarding the impacts of cap-and-trade on their investment. Owens' ignorance on the issue of cap-and-trade could open up his company to shareholder lawsuits."

It is a testament to the power and ruthlessness of liberal special interests that so many major corporations fear them. It says something not very flattering about the corporations as well.

Tom and Deneen have received quite a bit of media coverage (for example, here) for their work alerting the public to the dangerous alliance that is USCAP, and of the cost to the public, especially the disproportionate costs to lower income people of cap and trade" policies to restrict -- and raise the price of -- energy use. Unfortunately, as long cap and trade remains trendy for some, and a source of potential profit for others, it remains a danger to the prosperity of the American people._____